The fiftieth anniversary of Rule 23’s adoption in 1966 provides an opportunity to consider how legal change occurs. Law, culture, and incentives all play a role. But which dominates? The adoption of Rule 23 preceded a significant surge in the use of the class action, and some areas of litigation came to depend on Rule 23’s availability (e.g., securities litigation, antitrust litigation, and, for a time, mass torts litigation). Perhaps even more importantly, Rule 23 spurred the growth of the plaintiff’s bar, enabling small firms with a handful of lawyers to develop into major institutional firms of one hundred or more attorneys. Where once plaintiff ’s firms handled mainly personal injury cases, they grew to the point that they could finance and sustain major class action litigation for years and incur millions of dollars in expenses in the hopes of receiving an ultimate, but contingent, class action fee award. With this metamorphosis also came the full-scale appearance of “entrepreneurial litigation.” For our purposes, “entrepreneurial litigation” can be defined as litigation in which the attorney acts as a risk-taking entrepreneur, both financing and managing the litigation for numerous clients, who necessarily have smaller stakes in the litigation than the attorney. Put another way, the attorney acts less as an agent and more as a principal. In this world, it is truer to say that the attorney hires the client than that the client hires the attorney.
This style of litigation predated Rule 23’s amendment in 1966, and thus raises the obvious question: what really explains the explosion of class action litigation in the United States? Was it a legal change alone (i.e., Rule 23)? Or, is the U.S.’s unique level of aggregate litigation better explained by a preexisting legal culture that Rule 23 energized, thereby enabling private enforcement of law to increase exponentially? This brief Article cannot fully resolve those issues, but it suggests that perspective and insight is gained into the relative impact of law, culture, and incentives by looking at how entrepreneurial litigation is now spreading globally. In contrast to the American experience, the global expansion of class action litigation pits economic incentives against local culture and thus provides a basis for testing ideas about causation.
Comparative and Foreign Law | International Law | Law
John C. Coffee Jr.,
The Globalization of Entrepreneurial Litigation: Law, Culture, and Incentives,
U. Pa. L. Rev.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/2010